Form 1099-SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA (2025)

What Form 1099-SA Is For

Form 1099-SA is an official IRS tax form that reports money you withdrew from three types of medical savings accounts: Health Savings Accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), or Medicare Advantage Medical Savings Accounts (MA MSAs). Think of it as a receipt that proves you took money out of these special tax-advantaged healthcare accounts during the tax year.

Your account trustee or custodian—typically a bank, credit union, insurance company, or other financial institution managing your account—sends you this form if you made any withdrawals during the year. The distribution could have been paid directly to you or sent straight to a medical service provider like your doctor or hospital. Importantly, the form doesn't tell you whether your withdrawal is taxable; it simply reports that the distribution occurred. You'll need to determine the tax implications when filing your return using Form 8889 (for HSAs) or Form 8853 (for Archer MSAs and MA MSAs).

The IRS uses Form 1099-SA to track these withdrawals because while contributions to these accounts often receive tax benefits, distributions must be monitored to ensure they're being used properly for qualified medical expenses. If you use the money for non-medical purposes, you may owe income tax plus penalties, so this form helps the IRS verify compliance. IRS.gov

When You’d Use Form 1099-SA

When You'd Receive It (Late or Amended Forms)

Under normal circumstances, you should receive Form 1099-SA by January 31, 2026, if you took any distributions from your HSA, Archer MSA, or MA MSA during the 2025 calendar year. Your account custodian must provide this form to you and file it with the IRS. If you don't receive your form by early February, contact your account administrator immediately, as you'll need this information to complete your tax return accurately.

Sometimes you might receive a corrected Form 1099-SA marked "CORRECTED" in the designated checkbox at the top. This happens when your account custodian discovers an error in the original form they sent—perhaps they reported the wrong distribution amount, used an incorrect distribution code, or made other mistakes. When you receive a corrected form, use only the corrected version when preparing your tax return and discard the original. If you've already filed your taxes using incorrect information, you may need to file an amended return using Form 1040-X.

Late forms can arrive for various reasons: administrative delays, account custodian errors, or complicated situations like death of the account holder where beneficiary information needs verification. If you're missing your Form 1099-SA when you're ready to file your taxes, you can still file using your own records of distributions, though having the official form ensures accuracy and helps avoid IRS discrepancies. IRS.gov

Key Rules or Details for 2025

Several important rules govern Form 1099-SA reporting for the 2025 tax year. First, every distribution must be reported—there are no minimum thresholds or exemptions. Whether you withdrew $50 or $5,000, if money left your account, you'll receive a 1099-SA.

Not all distributions are taxable, which is crucial to understand. If you used your HSA or Archer MSA withdrawal to pay for qualified medical expenses for yourself, your spouse, or eligible dependents, the distribution is typically tax-free. Similarly, MA MSA distributions are tax-free when used for the account holder's qualified medical expenses only (not dependents). Qualified medical expenses generally include costs that would be deductible on Schedule A, such as doctor visits, prescriptions, dental care, vision care, and many other healthcare costs detailed in IRS Publication 502.

However, non-qualified distributions trigger taxes and penalties. If you're under 65 and use HSA funds for non-medical expenses, you'll pay ordinary income tax plus a 20% additional tax. For Archer MSAs and MA MSAs, the additional tax is also 20% (15% for MA MSAs). These penalties disappear once you reach age 65, turn disabled, or die—though you'll still owe regular income tax on non-medical withdrawals.

Rollovers and transfers are treated differently. You won't receive a Form 1099-SA for trustee-to-trustee transfers between similar accounts (HSA to HSA, Archer MSA to Archer MSA, or Archer MSA to HSA). But if you personally receive a distribution and roll it over to another eligible account within 60 days, the original distribution will appear on Form 1099-SA—you'll just report it as a rollover on Form 8889 or 8853 to avoid taxation.

Special mistaken distribution rules exist for HSAs. If you mistakenly withdrew money thinking an expense was qualified when it wasn't, you can return the funds by the due date of your tax return (excluding extensions) without tax consequences—provided your account custodian allows such returns. The original Form 1099-SA should be corrected in this situation.

For 2025, these accounts must follow contribution limits set annually by the IRS, though Form 1099-SA only reports distributions, not contributions. IRS.gov

Step-by-Step (High Level)

Step-by-Step: Understanding Your Form

Box 1: Gross Distribution

Shows the total amount withdrawn from your account during 2025, including any earnings reported separately in Box 2. This is the raw number before determining what's taxable.

Box 2: Earnings on Excess Contributions

Reports earnings you received when excess contributions (amounts above annual limits) were withdrawn by your tax return due date. These earnings are always taxable, even if you used them for qualified medical expenses. For most people, this box will be blank.

Box 3: Distribution Code

Identifies why the distribution occurred. Understanding these codes is critical:

• Code 1 (Normal distribution): The most common code for regular withdrawals to pay medical expenses
• Code 2 (Excess contributions): Withdrawals of contributions exceeding annual limits
• Code 3 (Disability): Distributions made after you became disabled
• Code 4 (Death distribution other than code 6): Payments to the deceased's estate
• Code 5 (Prohibited transaction): Violations of account rules triggering penalty provisions
• Code 6 (Death distribution to nonspouse beneficiary): Payments to non-spouse beneficiaries after the year of death

Box 4: Fair Market Value on Date of Death

Only applies when the account holder died. It shows the account's value on the date of death, which determines taxable amounts for beneficiaries.

Box 5: Account Type Checkbox

Indicates which account type this form covers—HSA, Archer MSA, or MA MSA. This matters because slightly different rules apply to each.

Once you've reviewed your Form 1099-SA, you'll transfer this information to Form 8889 (for HSA distributions) or Form 8853 (for Archer MSA and MA MSA distributions) when filing your Form 1040 or 1040-SR. These forms calculate whether your distributions are taxable and determine any penalties owed. Even if your entire distribution went to qualified medical expenses and isn't taxable, you must still report it—the IRS needs to see that you properly accounted for the distribution shown on Form 1099-SA. IRS.gov

Common Mistakes and How to Avoid Them

Mistake #1: Assuming all distributions are tax-free

Just because you have a 1099-SA doesn't mean the distribution is automatically tax-free. You must actually have spent the money on qualified medical expenses and be able to prove it. Keep detailed records—receipts, explanation of benefits statements, invoices—for every dollar you withdraw. The IRS can audit HSA distributions and will ask for documentation proving medical necessity.

Mistake #2: Forgetting to report the distribution at all

Some people think if they only used HSA money for medical expenses, they don't need to report anything. Wrong! The IRS receives a copy of your Form 1099-SA and expects to see it reported on your tax return via Form 8889 or 8853. Failing to report creates an automatic red flag and may trigger penalty notices.

Mistake #3: Confusing distribution codes

Using the wrong distribution code when reporting can cause tax calculation errors. Always double-check that the code on your Form 1099-SA matches your situation and that you're reporting it correctly on the corresponding tax form.

Mistake #4: Not accounting for previous years' expenses

You can use current-year HSA distributions to reimburse yourself for qualified medical expenses from previous years—but only expenses incurred after your HSA was established. Many people forget this flexibility exists and either let reimbursements languish or incorrectly report distributions as taxable.

Mistake #5: Mishandling inherited accounts

When someone dies and you inherit their HSA or MSA, special rules apply depending on whether you're a spouse or non-spouse beneficiary. Spouses can treat the account as their own; non-spouse beneficiaries must include the fair market value in income immediately. Misunderstanding these rules leads to significant tax errors.

Mistake #6: Throwing away the form

Even if you're certain your distribution was entirely for qualified medical expenses, keep Form 1099-SA with your tax records for at least three years. If the IRS questions your return, you'll need it to demonstrate proper reporting. IRS.gov

What Happens After You File

After you file your tax return including Form 8889 or Form 8853 with the Form 1099-SA distribution information, several outcomes are possible:

• Best case scenario: Your return is accepted without issue. The IRS matches the distribution amount on your Form 1099-SA with what you reported on Form 8889/8853, sees that you properly accounted for qualified medical expenses or correctly calculated taxes on non-qualified distributions, and processes your return normally. You'll receive any refund due or your payment will be processed without additional questions.
• If there's a discrepancy: The IRS may send a CP2000 notice indicating a mismatch between Form 1099-SA filed by your account custodian and what appears (or doesn't appear) on your tax return. This notice proposes tax changes, potentially including additional taxes and penalties. You'll have the opportunity to respond with documentation proving your distributions were for qualified medical expenses or explaining any reporting differences.
• If you owe additional tax: When you used distributions for non-qualified expenses and properly reported this on your return, you'll owe the income tax plus the applicable additional tax (typically 20%). This increases your total tax liability for the year, potentially resulting in a balance due or reduced refund.
• For audits: The IRS can audit HSA, Archer MSA, and MA MSA distributions, requesting detailed proof that withdrawals went toward qualified medical expenses. This is why maintaining thorough medical expense documentation is critical—not just receipts, but also proof that expenses weren't reimbursed by insurance and were for eligible individuals (you, your spouse, or qualifying dependents).
• Future implications: Improper use of medical savings accounts can affect your eligibility for future contributions, trigger ongoing penalties for excess contributions, and create multi-year tax complications. Taking the time to understand and correctly report Form 1099-SA protects both your current tax situation and future account benefits. IRS.gov

FAQs

1. Do I need Form 1099-SA if I only contributed to my HSA but didn't take any distributions?

No. Form 1099-SA only reports distributions (withdrawals). If you only made contributions during 2025, you won't receive Form 1099-SA. Instead, you'll receive Form 5498-SA by June 1, 2026, reporting your contributions and account balance. You'll still need to file Form 8889 with your tax return to report and deduct your HSA contributions, but no distribution reporting is necessary.

2. What if the amount on my Form 1099-SA doesn't match my records?

Contact your account custodian immediately. They may have made an error and need to issue a corrected Form 1099-SA. Keep detailed records of all distributions throughout the year—bank statements, withdrawal confirmations, payment receipts—so you can identify discrepancies quickly. If the form is correct but you forgot about a distribution, use the 1099-SA amount when filing your taxes, as that's what the IRS has on file.

3. Can I use my HSA distribution to pay for my adult child's medical expenses?

It depends. If your adult child qualifies as your dependent for tax purposes, their medical expenses are qualified medical expenses you can pay from your HSA tax-free. If they don't qualify as your dependent (typically after age 26 if not disabled), their medical expenses aren't qualified, and using HSA funds for them would trigger taxes and penalties. The key is the dependency test, not just the parent-child relationship.

4. I rolled over my HSA to a different custodian. Why did I get Form 1099-SA?

Direct trustee-to-trustee transfers shouldn't generate Form 1099-SA. However, if you received the distribution personally and then deposited it into another HSA within 60 days (an "indirect rollover"), Form 1099-SA will be issued showing the distribution. You'll report this as a rollover on Form 8889 to avoid taxation. Make sure to complete the rollover within 60 days and only do one rollover per 12-month period for HSAs.

5. What happens if I used part of my distribution for qualified expenses and part for non-qualified expenses?

You'll report the total distribution on Form 8889, then calculate the qualified portion that's tax-free and the non-qualified portion that's taxable (plus subject to the 20% additional tax if you're under 65). Form 8889 has specific lines for this calculation. This is why maintaining detailed records is essential—you need to know exactly which expenses were qualified versus non-qualified to properly allocate the distribution.

6. Do I have to report my Form 1099-SA if the distribution was very small?

Yes. There's no minimum threshold for reporting distributions. Whether you withdrew $10 or $10,000, if you received Form 1099-SA, you must report it on Form 8889 or Form 8853. The IRS computer systems match these forms, and failing to report even small amounts can trigger inquiries.

7. I inherited my parent's HSA. Do I have to pay taxes on it?

If you're the surviving spouse, you can treat the HSA as your own and no immediate taxes are due. For non-spouse beneficiaries, the fair market value of the HSA on the date of death is immediately taxable as income to you, even if you leave the money in the account. This will be reported on Form 1099-SA with Code 6 if distributed after the year of death. Any subsequent earnings (amounts above the fair market value at death) are also taxable income when distributed. Consider consulting a tax professional for inherited account situations, as the rules are complex. IRS.gov

For more information: Visit IRS.gov/Form1099SA for the latest forms, instructions, and updates. See IRS Publication 969 for comprehensive guidance on Health Savings Accounts and Archer MSAs, and Publication 502 for a detailed list of qualified medical expenses.

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